A closed Nakumatt branch in Nairobi. FILE PHOTO | NATION MEDIA GROUP
Nakumatt creditors will on Tuesday vote to dissolve the once giant retailer after efforts to revive the supermarket failed.
Peter
Kahi, the court-appointed administrator of the troubled supermarket
chain, says the creditors’ only meeting set for on January 7 will
formally end the Nakumatt brands should the creditors support the
liquidation plan.
The creditors
including banks, suppliers and landlords are owed Sh38 billion and the
administrators will share about Sh422 million received from the sale of
six Nakumatt branches to Naivas.
“With
the sale of assets to Naivas Ltd having been concluded, the
administrator distributes and appropriates funds of the company to the
various classes of creditors in line with IA 2015, after meeting costs
of the administration,” said Mr Kahi of the Sh422 million.
The
six branches were expected to help the retail chain recover as it went
back to the drawing board to correct the wrongs, pick up the pieces and
bounce back having learnt from its mistakes. But, it appears, this dream
cannot work.
“An attempted
turnaround of the business would be very costly and the company is
likely to be loss-making for the better part of the turnaround window,
implying that such a turnaround would need to be financed by additional
debt to sustain operations before achieving breakeven,” says the notice.
“The company also has no assets to collateralise such additional funding.
“The
administrator is of the view that it is likely to be difficult to
attract an investor to inject the substantial amount of equity required
to restructure NHL’s (Nakumatt Holdings Limited) balance sheet due to
the current high degree of financial leverage.”
A creditor owed less than Sh100,000 and those that have failed to show proof of their debt will not be allowed to vote.
Nakumatt went into voluntary supervision in early 2018 after seeking protection from its creditors.
The
retailer, which grew from a mattress shop in Nakuru to have branches
across Kenya and East Africa, was forced to shut dozens of outlets from
2017 as it struggled to repay its suppliers, landlords and other
creditors.
By February 2017, it had 60 branches that dropped to six in September 2018.
Its sales dropped Sh1.9 billion in the year to February down from Sh51.9 billion in a similar period in 2017.
The
company sought protection using Kenya’s newly enacted company laws,
which provide a pathway for distressed firms to avoid complete collapse.
Naivas
Supermarkets paid Sh422 million for Nakumatt’s remaining assets,
outbidding rivals Chandarana who offered Sh246 million for the six
stores while Tuskys bid Sh70 million for three branches.
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